Latest results for Enterprise Inns show net income up 1.1%

The company said all geographic areas performing in line with, or ahead of, the comparative period. Profit before tax and exceptional items was maintained at £55 million as interest savings offset reduction in EBITDA; pre-exceptional EBITDA fell to £147m (H1 2013: £153m) “primarily reflecting the impact of our asset disposal programme”.

Business failures reduced by 16% compared to the equivalent period last year, the firm said.

During the period 32% of capital investment was focused on “growth driving initiatives”, up from 20% in the first half of the prior year. Capital expenditure of £41m (H1 2013: £29m) funded from net disposal proceeds of £42m (H1 2013: £54m).

Enterprise said strong cash generation enabled it to reduce net debt to £2.5bn (H1 2013: £2.7bn). Adjusted earnings per share were up 2.4% at 8.6p (H1 2013: 8.4p).

Positive​

Simon Townsend, chief executive, said: “While market conditions remain challenging, we are pleased to have delivered like-for-like net income growth in the first six weeks of the second half of the financial year, maintaining the positive momentum delivered in the first half.

“Whilst the latter part of the year will be measured against tougher comparatives, we are confident that the quality of our publicans and our continuing investment in our pub estate, combined with the proactive support of our dedicated team, will enable us to achieve our target of sustainable like-for-like net income growth for the full year and deliver significant cash flows with which to drive long term value creation.”

The company said that the total number of pubs operating in under its Beacon format has remained broadly stable at 180, with strong like-for-like net income growth during the first half of the year.

The group said: “Our Beacon ‘managed tenancy’ model has evolved to become a successful operating concept, providing a simple, value-for-money, drinks-led pub offer to our publicans who are supported by a dedicated retail team focused on sales, marketing, customer service and cost control.”

New format​

The company recently opened its first managed site, the St James’ at Bermondsey, and reiterated that whilst its core business will remain focused on the leased and tenanted model, it believes it is appropriate to continue to consider alternative operating formats and trading styles with which to maximise income and returns from the pub estate.

It said: “We are therefore evaluating a more proactive approach to the assessment, and selection, of the right retail offer and appropriate operating model for each pub, as well as the infrastructure requirements to support any alternative formats identified.”

In April 2014, the company said that over 1,500 publicans attended its “Enterprise Live” events, which represents a 29% increase in attendance over the prior year.

It said: “These trade shows brought together an even wider selection of suppliers and product categories, enabling our publicans to access exclusive offers with potential total savings of up to £7,000 per pub. We were also able to showcase our pubs to prospective publicans, and interviewed over 280 prospective publicans as a result.

“We are now in the final test phase of our new digital ordering capability, and will be rolling the service out to parts of our estate during the second half of the year. The platform has been developed with the direct involvement of our publicans and is designed to provide an efficient and convenient method of order capture alongside a dynamic and personalised communication interface.”

Training​

The group said that it had also developed new publican training packages and have delivered training to over 1,500 participants in the period, a 52% increase on the equivalent period last year.

It has also launched its first mentoring network, enabling “experienced and successful ETI publicans to coach those with less experience through their first few months alongside our own support programmes”. The company said it continued to grow its strategic partnerships with suppliers in order to create more value for publicans across a range of goods and services.

It said that since its launch last year, 720 ETI publicans have taken advantage of its discounted Sky entertainment package, and to date 191 pubs are benefitting from the enhanced terms of its discounted BT Sports package. Over 1,300 pubs are now using the Arqiva platform to provide free, high quality WiFi for their customers. A further 1,166 have signed up for this service.

Enterprise said: “We are building a larger range of food suppliers to ensure that our publicans can take full advantage of the growing share of food and food-related income growth, with national and local suppliers working alongside our publicans to give them the benefit of competitive offers, advice and business support. More than 325 publicans now belong to our Enterprise Food Club with Brakes and they are able to access discounts of up to 30%, as well as additional incentives and support.”

Encouraging​

Townsend said: “I am pleased to be able to report positive progress for the business with like-for-like net income growth in the first half of the year and am particularly encouraged to see this translate into growth in earnings per share.

“Our focus continues to be on the implementation of actions that will sustain our improving trading performance and drive value for our publicans, which include the further enhancement of our pub estate and the provision of exceptional local support.

“Whilst the latter part of the year will be measured against tougher comparatives, I am confident that through our activities to support publicans to grow.”

Read leading analyst Geoff Colyer's thoughts on the Enterprise results on the Publican's Morning Advertiser's sister title M&C Report here​.